Business News
MTN to still sell stake in its Nigerian subsidiary
The telecommunication giant, MTN Group Ltd, has resolved to go ahead with its plans to reduce its stake in its Nigerian subsidiary.
Telecommunication giant, MTN Group Ltd, has resolved to go ahead with plans to reduce its stake in its Nigerian subsidiary.
The South African based firm, whose Nigerian business unit is the largest telecommunication firm in Nigeria, will have to sell off those shares in smaller units than earlier anticipated due to the effect of the coronavirus pandemic on the global economy and the capital market.
Nigeria, which happens to be MTN’s biggest market, accounted for a third of overall 2019 revenue and almost 40% of earnings before interest, taxes, depreciation and amortization, is also the biggest provider of telecommunication services in the country, with about 69 million customers, according to the Nigerian Communications Commission (NCC).
Although the impact of the coronavirus disease and the crash in crude oil prices globally has been quite huge, especially on the financial and capital markets, officials of MTN Group, still recognize the importance of selling part of its 79% stake to local investors.
(READ MORE: Coronavirus: MTN Nigeria sensitises customers with network bar)
In a monitored report, the Chief Financial Officer of the firm, Ralph Mupita, in an interview, said, ‘However, the rest of a three-to-five-year plan to dispose of 25 billion rands ($1.4 billion) of assets will probably take a back seat for nor’.
‘In Nigeria, we still want to do part of our retail offer, even if it’s a smaller part of the total planned sale’
‘We are applying our minds to doing this at the moment’
It can be recalled that MTN’s Nigerian subsidiary has been involved in a couple of disputes with the Federal Government over its operation in Nigeria. This started when in 2015, Nigeria slammed the Telecomm firm with a heavy fine of $5.2 billion after it was accused of a security breach and not disconnecting users with improper records.
However, this fine was reduced to $3.9 billion after diplomatic negotiations between the South African Government and then MTN itself.
They also recently had a legal disagreement with the government over tax payments and irregular capital importation certificate.
(READ MORE:Ministers task DStv, MTN, others to offer free subscription, airtime, data to Nigerians)
MTN plans to dispose of its 15% stake to indigenous investors, thereby reducing its shareholding to about 64%.
The crash of crude oil prices has had a huge negative impact on the global economy including major oil producers like Nigeria. That development in addition to the outbreak of the coronavirus pandemic has adversely affected the capital market which has seen stocks crash globally. The MTN Nigeria’s share price crashed from N104.50 on March 18, 2020, to N90 on March 30, 2020.
The MTN Group’s share price which hit a 15 year low last week, has since rallied back for 6 straight days
The CFO said, “We, of course, have no visibility on how all of this could play out, but the business currently has a resilient balance sheet and is highly cash generative, with most of our business coming from pre-paid contracts,”
The telecoms firm expects an increase in data usage as its customers go into lockdown and restrictions due to the outbreak of the coronavirus.
Economy & Politics
Output cut: Nigeria leads in OPEC non-compliance with 50 unsold cargoes of crude
Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.
As opinions continue to differ on whether OPEC will extend its current oil output cut beyond June, available information has shown that not all members of the oil cartel complied fully with their agreed quotas for the month of May. This is despite the fact that the oil output by OPEC member countries reached its lowest in almost 20 years.
Available data from oilprice.com showed that OPEC members cut their output by 5.91 million barrels per day from the April level, producing 24.77 million barrels per day. This figure also showed a 4.48 million barrel per day of the agreed output cut, thereby representing a 74% compliance level.
Nigeria and Iraq were reported not to have kept to their commitment to the huge production cut deal that had promised to reduce output by 9.7 million barrels of crude oil per day.
Iraq was able to achieve just 38% compliance of its agreed output cut for the month of May, while Nigeria, which achieved a much lower compliance of the agreed output cut, recorded 19% compliance of what was agreed. Saudi Arabia showed the highest compliance, recording 96% of the agreed output cut.
Some have attributed the noncompliance of some members of OPEC to the agreed output cut, to the contractual obligations and commitment to buyers, given the short timeframe between when the agreement for the output cut was made and its implementation.
Meanwhile oil exports from Angola and Congo remained steady at high prices on Friday, while Nigerian oil fared lower amid huge inventory of unsold cargoes.
Nigeria continues to face some difficulty in the oil market, primarily due to sluggish demand from Europe; it has around 50 unsold cargoes of crude oil yet to be sold for the months of June and July.
Meanwhile, India has become one of the few buyers for the Nigerian oil. Indian oil firms bought about 5-6 million barrels of Nigerian crude oil last week and has bought about 2 million barrels as at Thursday this week.
Business News
President Muhammadu Buhari reshuffles NNPC’s board of directors
Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.
President Muhammadu Buhari has approved the reconstitution of the board of the Nigerian National Petroleum Corporation (NNPC) after the expiration of the tenure of the current board.
The newly constituted board members are expected to serve for a tenure of three years, effective immediately. They will take over from the last board, whose 3-year tenure officially ended in 2019. Information about this development is contained in a State House press release that was published on the official twitter handle of the Nigerian Presidency on Saturday morning.
READ MORE: Construction of ICT Parks nudges Nigeria into digital transformation
STATE HOUSE PRESS RELEASE
PRESIDENT BUHARI RECONSTITUTES NNPC BOARD
President @MBuhari has approved the reconstitution of the Board of the Nigerian National Petroleum Corporation (@NNPCgroup), after the expiration of the term of the board members appointed in 2016.
— Presidency Nigeria (@NGRPresident) May 30, 2020
READ ALSO: CBN and NIPOST open pilot microfinance branches
The newly constituted NNPC board is made up of six members from each of the geo-political zones in the country. The members include the following individuals:
- Mallam Mohammed Lawal, representing the North West
- Dr Tajudeen Umar from North East
- Adamu Mahmood Attah from North Central
- Senator Magnus Abe from the South-South
- Dr Stephen Dike from the South East, and
- Chief Pius Akinyelure from the South West geo-political
READ MORE: Boko Haram: A protracted battle yet to be won?
Of the six members, three are returning members on the board – Chief Pius Akinyelure, Mallam Mohammed Lawal, and Dr Tajudeen Umar from North East.
Note that the constitution of the new board is considered a welcome development, as it balances the representation of the six geo-political zones on the board. The previous constitution of the board was faulted for not being “balanced”.
READ ALSO: Full text of President Muhammadu Buhari’s 58th Independence day broadcast
Note that the former board included the late Chief of Staff to the President, Abba Kyari as a member. Stakeholders have since expected the President to reconstitute a new board to take over.
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Around the World
Zoom’s market valuation hits $50 billion mark, thanks to COVID-19
Zoom’s share price now trades at an eye-watering 55 times estimated revenue compared with an average of 7 times for information technology stocks in the S&P 500, according to information obtained from Bloomberg.
Zoom Video Communications’ shares surged to record highs on Friday, as bullish runs in the last hours of trading helped the company to close with a market capitalization of more than $50 billion. The stock gained about 9.7% to jump to $179.48, thereby giving it a market value of $50.6 billion.
Note that this is the first time Zoom’s valuation is reaching this high level since it became a quoted company. The tech giant, which owns popular video conferencing software “Zoom”, has gained more than 160% this year. This is because investors are betting that the surge in Zoom users amid the COVID-19 pandemic, would eventually translate to long-lasting revenue growth.
READ ALSO: How VCs are encouraging terrible business practices by founders
Zoom’s share price now trades at an eye-watering 55 times estimated revenue compared with an average of 7 times for information technology stocks in the S&P 500, according to information obtained from Bloomberg.
Following the significant jump in the company’s valuation, the net worth of its founder and Chief Executive Officer, Eric Yuan, also rose significantly by more than $800 million on Friday. He now has a net worth of $9.3 billion, according to the Bloomberg Billionaires Index.
Meanwhile, in reaction to Zoom’s overnight success, Gennie Gebhart, a researcher with the Electronic Frontier Foundation, said she hoped Zoom would change course and offer protected video more widely. It should be recalled that some users of the app had raised security concerns back in April, as Nairametrics reported.
READ ALSO: Did Satoshi Nakamoto cause the panic sell-off in Bitcoin market
Meanwhile, Zoom has recruited Alex Stamos, a former chief security officer at Facebook, and other top security experts to help deal with the security issues which led to some top companies banning its use. While discussing efforts being made to deal with the security challenges, Stamos told Reuters:
“At the same time that Zoom is trying to improve security, they are also significantly upgrading their trust and safety. The CEO is looking at different arguments. The current plan is paid customers plus enterprise accounts where the company knows who they are.”
